Tata Coffee Limited, Bangalore V. DCIT, Bangalore

ITA 568/BANG/2015

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9165 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Capital asset; Business income; Transfer pricing; Rectification of order; Opportunity of being heard; International transaction; Cost of acquisition; Fair market value; Capital expenditure; TDS; Rule 8D; Set aside; Capital Gains
• Section: 143(3); 14A; 37(1); 144C; 13; 22; 92CA; 90; 154

Judgement Text

IT(TP)ANOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A NOS.568 & 729/BANG/2015 ASSESSMENTYEARS:2010-11 & 2010-11 TATA COFFEE LIMITED 57 RAILWAY PARALLEL ROAD KUMARA PARK WEST BENGALURU 560 025. PAN NO :AABCC0241R VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 5(1)(1) BENGALURU APPELLANT RESPONDENT IT(TP)A NO.190/BANG/2015 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 5(1)(1) BENGALURU VS. TATA COFFEE LIMITED 57 RAILWAY PARALLEL ROAD KUMARA PARK WEST BENGALURU 560 025. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. VASUDEVAN, A.R. RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, D.R. DATE OF HEARING : 16.03.2021 DATE OF PRONOUNCEMENT : 22.03.2021 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED TWO APPEALS AND THE REVENUE HAS FILED ONE APPEAL FOR ASSESSMENT YEAR 2010-11. THE APPEAL FILED BY THE ASSESSEE IN IT(TP)A 568/BANG/2015 AND THE APPEAL OF THE REVENUE ARE DIRECTED AGAINST THE ASSESSMENT ORDER PASSED BY THE AO U/S IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 2 OF 16 143(3) R.W.S. 144C (13) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] IN PURSUANCE OF DIRECTIONS GIVEN BY LD DISPU TE RESOLUTION PANEL (DRP). THE OTHER APPEAL OF THE ASSESSEE IS D IRECTED AGAINST THE RECTIFICATION ORDER PASSED BY THE AO. ALL THES E APPEALS ARE DISPOSED BY THIS COMMON ORDER, FOR THE SAKE OF CONV ENIENCE. 2. THE GROUNDS URGED BY THE ASSESSEE IN BOTH OF ITS APPEALS GIVE RISE TO THE FOLLOWING ISSUES:- (A) TRANSFER PRICING ADJUSTMENT MADE ON RECOVERY OF THIRD PARTY EXPENSES (B) DISALLOWANCE OF RESEARCH & DEVELOPMENT EXPENS ES (C) DISALLOWANCE U/S 14A OF THE ACT (D) NON-GRANTING OF ENTIRE FOREIGN TAX CREDIT CLAI MED BY THE ASSESSEE (E) NON-GRANTING OF ENTIRE TDS CLAIMED BY THE ASS ESSEE. 3. THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE DIRECTION GIVEN BY LD DRP FOR ADOPTING FAIR MARKET VALUE AS O N 01-04-1981 FOR COMPUTING CAPITAL GAINS. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF G ROWING, CURING OF COFFEE AND TEA AND ALSO MANUFACTURING & MARKETING O F VALUE ADDED COFFEE/TEA PRODUCTS. IT GROWS COFFEE IN ITS OWN EST ATES, PROCESSES THE BEANS, EXPORTS GREEN COFFEE, MANUFACTURES & EXPORTS INSTANT COFFEE. THE ASSESSEE ALSO GROWS PEPPER AND CARDAM OM. 5. THE FIRST ISSUE URGED BY THE ASSESSEE RELATE S TO THE TRANSFER PRICING ADJUSTMENT OF RS.94,40,071/- CONFIRMED BY L D DRP. 5.1 THE FACTS RELATING TO THE ABOVE SAID TRANS ACTION ARE THAT THE ASSESSEE HAS SHOWN A SUM OF RS.9,44,00,714/- AS AN INTERNATIONAL TRANSACTION UNDER THE TITLE REIMBURSEMENT OF EXPEN SES RECEIVED FROM ITS AE NAMED CAMPESTRESS HOLDINGS LTD. INIT IALLY, THE IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 3 OF 16 ASSESSEE MENTIONED THE ABOVE SAID AMOUNT AS REFUND OF ADVANCE. ACCORDINGLY, IT WAS SUBMITTED THAT THE ABOVE SAID R ECEIPT DOES NOT HAVE ANY IMPACT ON THE PROFIT AND LOSS ACCOUNT AND HENCE NO BENCH MARKING IS REQUIRED. HOWEVER, THE ASSESSEE C HANGED THE VERSION BEFORE TPO AND CLAIMED THAT THE ABOVE SAID AMOUNT IS REIMBURSEMENT OF EXPENSES. 5.2 IT WAS SUBMITTED THAT THE ASSESSEE INTENDED T O ACQUIRE A COMPANY NAMED OOO SUNTY LIMITED, RUSSIA. IN THAT PROCESS, IT HAS INCURRED EXPENSES ON CARRYING DUE-DILIGENCE EXE RCISES TO THE EXTENT OF RS.9,44,00,714/-. THE ABOVE SAID EXPENSE S WERE INCURRED BY THE ASSESSEE FROM MARCH, 2007 TO AUGUST, 2009. HOWEVER, DUE TO CERTAIN BUSINESS REASONS, THE ABOVE SAID ACQUISI TION OF OOO SUNTY LIMITED WAS SHELVED. WE NOTICE THAT THE ASSE SSEE HAS TITLED THIS TRANSACTION AS PROJECT KREMLIN. SUBSEQUENTL Y, THE AE OF THE ASSESSEE M/S CAMPESTRESS HOLDINGS LTD ACQUIRED THE ABOVE SAID COMPANY OOO SUNTY LIMITED. HENCE THE ASSESSEE RA ISED A DEBIT NOTE DATED 31 ST AUGUST, 2009 UPON M/S CAMPESTRESS HOLDINGS LTD (CHL) FOR A SUM OF RS.9,44,00,714/-, BEING PRE-ACQU ISITION EXPENSES INCURRED BY THE ASSESSEE ON DUE DILIGENCE EXERCISES. IT APPEARS THAT M/S CAMPESTRESS HOLDINGS LTD HAS ACCEP TED THE DEBIT NOTE AND PAID THE AMOUNT TO THE ASSESSEE. 5.3 UNDER THESE SET OF FACTS, THE TPO CONCLUDED AS UNDER:- 8. TO CONCLUDE THE TAX PAYER ITSELF GAVE WRONG SUBMISS ION IN 3CEB REPORT ABOUT THE AMOUNTS RECEIVED AS REFUND OF AN ADVANCE, LATER ON CHANGED THE NATURE OF RECEIPT AS REIMBURSEMENT OF EXPENSES. THE DETAILS SUBMITTED BY THE TAX PAYER DO NOT SHOW ANY INTRA GROUP SERVICES BEIN G RENDERED BY THE AES TO THE TAXPAYER WHICH REQUIRES THE REIMB URSED. THE TAX PAYER WAS INDEPENDENTLY PURSUING THE ACQUISITIO N OF 000 SUNTY RUSSIA FOR WHICH IT HAD INCURRED CERTAIN EXPE NDITURE. THIS EXPENDITURE HAS NOTHING TO DO WITH THE AES. THE AES HAVE TRANSFERRED THE FUNDS TO TATA COFFEE IN THE NAME OF REIMBURSEMENT OF EXPENSES. ON DETAILED STUDY OF THE MATERIAL AVAILABLE ON RECO RD, SUBMISSION MADE BY THE ASSESSEE AND TPO'S IN DEPTH STUDY OF TH E ISSUE IT IS IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 4 OF 16 CLEAR THAT THERE IS A TRANSFER OF FUNDS TO THE TAX PAYER FROM THE AES IN THE NAME OF REIMBURSEMENT OF EXPENSES. THE N OMENCLATURE OF REIMBURSEMENT IS USED TO NOT TO INCLUDE THE RECE IPTS IN THE TOTAL REVENUES WHICH IS TAXABLE. THE ARM'S LENGTH PRICE DETERMINATIONS FOR THE REIMBURSEMENT OF EXPENDITURE OF KREMLIN PROJECT IS AS FOLLOWS. THE TOTAL AMOUNT OF EXPENDITURE INCURRED UNDER CUP METHOD IS NIL. THE ARM'S LENGTH PRICE ADJUSTMENT UNDER CUP METHOD IS RS.96,076,131/- TO SUM UP THE TOTAL ALP ADJUSTMENT IS RS.96,076,131 /-. THE ABOVE AMOUNT OF RS. 96,076,131/-. IS TREATED AS TRANSFER PRICING ADJUSTMENT U/S 92CA IN RESPECT OF REIMBURSE MENT OF EXPENDITURE OF KREMLIN PROJECT OF THE TAXPAYER'S IN TERNATIONAL TRANSACTIONS. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD ALSO DECLARED INTERNATIONAL TRANSACTIONS BY WAY OF REIMBURSEMENT OF EXPENSES OF RS.16,75,417/- AND HENCE THE TPO HAS MADE ADJUSTMEN T TO THE TUNE OF RS.9,60,76,131/-, WHICH IS INCLUSIVE OF ABO VE SAID AMOUNT. THE LD DRP DELETED THE TP ADJUSTMENT OF RS.16,75,41 7/- AND HENCE THE FACTS RELATING TO NET AMOUNT OF TP ADJUSTMENT O F RS.9,44,00,714/- ARE DISCUSSED HERE. 5.4 THE LD DRP HELD THAT THE TPO WAS NOT RIGHT IN MAKING TP ADJUSTMENT OF ENTIRE AMOUNT ON THE REASONING THAT T HERE WAS NO INTRA-GROUP SERVICES BETWEEN THE AES. THE LD DRP H ELD THAT THE TP ADJUSTMENT SHOULD BE RESTRICTED TO MARK-UP AMOUNT O F THE AMOUNT SPENT BY THE ASSESSEE. ACCORDINGLY, THE LD DRP DIRE CTED THE TPO TO DETERMINE THE MARK-UP @ 10% AND ACCORDINGLY ISSUED THE DIRECTION. THE OBSERVATIONS MADE BY LD DRP ARE EXTRACTED BELOW :- 4.3 THE TAX PAYER'S OBJECTIONS AS ABOVE HAVE BEEN E XAMINED ALONG WITH THE FACTS OF THE CASE. THE FACT THAT THE TAX PAYER HAD MISREPRESENTED THE NATURE OF TRANSACTION IN THE 3CE B REPORT AS 'REFUND OF AN ADVANCE' AND LATER, WHEN THE TPO CALL ED FOR DETAILS, CATEGORIZED ITS NATURE AS 'REIMBURSEMENT O F EXPENSE' IS NOT IN DISPUTE. FROM THE SEQUENCE OF EVENTS IT IS C LEAR THAT WHEN IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 5 OF 16 THE IMPUGNED EXPENSES WERE BEING INCURRED BY THE TA X PAYER FROM MARCH,2007 TO AUGUST, 2009 IN PURSUIT OF ITS I NTENDED ACQUISITION OF THE RUSSIAN COMPANY IT WAS INCURRING THE EXPENDITURE ON ITS OWN SINCE CHL THEN WAS NOT ON TH E SCENE IN THE CONTEXT OF THIS ACQUISITION. CHL DID NOT EVEN H AVE AN AGREEMENT OR UNDERSTANDING WITH THE TAX PAYER THEN THAT THIS STAGE OF WORK/ACTIVITIES WOULD BE CARRIED OUT BY TH E TAX PAYER AND THE SUBSEQUENT STAGES TAKEN OVER BY THE CHL. ON CE THE GROUP DECISION WAS TAKEN FOR THE PROJECT TO THE ACQ UIRED BY CHL AND NOT TATA COFFEE LTD., THE SUBSEQUENT ACTIVI TIES BECAME THE RESPONSIBILITY OF CIIL. HOWEVER, THE EXP ENDITURE IN THE INITIAL PHASES TOTALING RS.9.44 CRORE COULD NOT HAVE BEEN TAKEN INTO THE BOOKS OF CHL AS EXPENDITURE FOR GROU ND WORK ALREADY DONE IN THE ACQUISITION PROCESS IF THE RELA TIONSHIP BETWEEN THE TWO ENTITIES HAD BEEN UNCONTROLLED. IF THE TAX PAYER WAS PASSING ON THE BENEFIT OF ITS GROUND WORK DONE FOR AN ACQUISITION PROJECT TO AN UNCONTROLLED PARTY, IT WO ULD HAVE CHARGED A MARK UP IN THE NORMAL COURSE OF BUSINESS SINCE ITS RESOURCES, INFRASTRUCTURE, SKILLS, TIME ETC., WERE INVESTED IN THE ACTIVITIES AND A MARK UP FOR THE SAME WAS JUSTIFIED . A REIMBURSEMENT AT THE LEVEL OF COST DOES NOT REPRESE NT AN UNCONTROLLED BUSINESS TRANSACTION AS PER NORMAL COM MERCIAL PRACTICES. IN FACT, THE ENTIRE RANGE OF PRE-ACQUIS ITION ACTIVITIES CONDUCTED BY THE TAX PAYER FOR THE ACQUISITION OF S UNTY LTD, WHICH WAS FINALLY ACQUIRED BY CHL, CLEARLY REPRESENTS A S ERVICE PERFORMED BY THE TAX PAYER FOR CHL SINCE THE LATTER DID NOT HAVE TO DUPLICATE EFFORTS AND RESOURCES FOR THESE ACTIVITIE S. THE TPO'S UNDERSTANDING THAT THERE WAS NO INTRA-GROUP SERVICE BETWEEN THE AES IS, THEREFORE, ERRONEOUS. 4.4 THE TAX PAYER'S OPERATING PROFIT TO OPERATING E XPENSES IS AT 11.05% AS EVIDENT FROM ITS FINANCIAL RESULTS AT PAGE 3 OF THE TPO'S ORDER. THE RATIO OF OPERATING PROFIT TO SALES IS 9.95%. IN VIEW OF THE FACTS AND CIRCUMSTANCES RELATED TO THE IMPUGNED TRANSACTIONS A MARK-UP OF 10% IS CONSIDERED REASONA BLE. THE TP ADJUSTMENT, THEREFORE, IS DIRECTED TO BE RESTRIC TED TO THIS AMOUNT. THE OBJECTIONS ARE PARTLY ACCEPTABLE. 5.5 THE LD. A.R. SUBMITTED THAT THERE IS NO IN COME ELEMENT IN THIS TRANSACTION. IN THE ABSENCE OF ANY INCOME ELEMENT, THE LD. DRP WAS NOT JUSTIFIED IN MAKING TP ADJUSTMENT TO TH E EXTENT OF 10% OF THE REIMBURSEMENT OF AMOUNT RECEIVED BY THE ASSE SSEE. HE FURTHER SUBMITTED THAT THE LD. DRP HAS DETERMINED T HE RATE OF 10% ON THE BASIS OF OPERATING PROFIT OF THE ASSESSEE, W HICH IS NOT RECOGNIZED METHOD OF BENCH MARKING PRESCRIBED IN TH E I.T. RULES. IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 6 OF 16 ACCORDINGLY, HE SUBMITTED THAT THE ENTIRE TP ADJUST MENT SUSTAINED BY THE LD. DRP SHOULD BE DELETED. 5.6 THE LD. DR ON THE CONTRARY SUBMITTED THAT THE A SSESSEE HAS INCURRED EXPENDITURE IN THE PROCESS OF ACQUISITION OF M/S OOO SUNTY LIMITED. SINCE THE ASSESSEE HAS SPENT MONEY A ND ALSO PERFORMED PRE-ACQUISITION ACTIVITIES AND THUS, RELI EVED OF THE SUBSEQUENT BUYER (AE OF THE ASSESSEE) FROM PRE-ACQU ISITION EXERCISES, THE SAME WOULD REPRESENT SERVICES PERFOR MED BY THE ASSESSEE TO CHL. ACCORDINGLY, THE LD. D.R. SUBMITT ED THAT THE LD. DRP WAS JUSTIFIED IN ESTIMATING THE MARKUP AT 10% O F THE INVESTMENT MADE BY THE ASSESSEE. 5.7 WE HEARD RIVAL CONTENTIONS ON THIS ISSUE AND PE RUSED THE RECORD. ADMITTEDLY, THE ASSESSEE HAS SPENT RS.9.44 CRORES FROM MARCH, 2007 TO AUGUST, 2009 IN CONNECTION WITH PROP OSITION OF ACQUISITION OF OOO SUNTY LIMITED, RUSSIA, WHICH WAS TITLED AS PROJECT KREMLINE. SUBSEQUENTLY, ON ACCOUNT OF CH ANGE IN STRATEGY BY TATA GROUP, THE ABOVE SAID M/S. OOO SUNTY LIMITE D, RUSSIA WAS ACQUIRED BY ANOTHER A.E. NOW M/S. CAMPESTRESS H OLDINGS LTD. HENCE, THE ASSESSEE RAISED A DEBIT NOTE OF RS.9.44 CRORES ON 31.8.2009 UPON M/S. CAMPESTRESS HOLDINGS LIMITED RE QUIRING REIMBURSEMENT OF THE EXPENDITURE INCURRED BY THE AS SESSEE ON DUE DILIGENCE (PRE-ACQUISITION) EXERCISES TOWARDS ACQUI SITION OF M/S. OOO SUNTY LIMITED, RUSSIA. 5.8 THE ASSESSEE HAS CLAIMED THAT IT IS A CASE OF M ERE REIMBURSEMENT OF EXPENSES. WE HAVE EARLIER NOTICED THAT THE ASSESSEE HAS INITIALLY CLAIMED SAME AS REFUND OF AD VANCE AND LATER CHANGED ITS VERSION AS REIMBURSEMENT OF EXPENSES. SINCE THE ASSESSEE HAD INITIALLY INTENDED TO ACQUIRE M/S. OOO SUNTY LIMITED, RUSSIA, IN OUR VIEW, IT CANNOT BE HELD THAT THE EXP ENSES OF RS.9.44 CRORES WERE INCURRED BY THE ASSESSEE ON BEHALF OF M /S. CAMPESTRESS IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 7 OF 16 HOLDINGS LTD. I.E., IT IS NOT A CASE WHERE M/S. CAM PESTRESS HOLDINGS LIMITED INTENDED TO ACQUIRE THE RUSSIAN COMPANY FRO M THE BEGINNING AND THE ASSESSEE WAS INCURRING EXPENDITUR E ON BEHALF OF M/S. CAMPESTRESS HOLDINGS LTD. 5.9 ON THE CONTRARY, IT IS THE ASSESSEE, WHICH HAS SPENT THE AMOUNT OF RS.9.44 CRORES ON ITS OWN ACCOUNT AND SUB SEQUENTLY, DUE TO CHANGE IN THE STRATEGY OF THE BUSINESS GROUP TO WHICH ASSESSEE BELONG TO, THE ABOVE SAID RUSSIAN COMPANY WAS ACQUIRED BY M/S. CAMPESTRESS HOLDINGS LTD. HENCE, IN OUR VI EW, THE LD. D.R.P. WAS RIGHT IN OBSERVING THAT IN AN UNCONTROLL ED TRANSACTION WHEN THE ASSESSEE IS TRANSFERRING THE BENEFIT OF GR OUND WORK DONE BY IT ON ACQUISITION PROJECT TO AN UNCONTROLLED PAR TY, IT WOULD HAVE CHARGED A MARK UP IN THE NORMAL COURSE SINCE ITS RE SOURCES, INFRASTRUCTURE, SKILLS, TIME, ETC. WERE INVESTED IN THE SAID ACTIVITIES. HENCE WE ARE UNABLE TO ACCEPT THE CONTENTIONS OF LD A.R THAT THIS TRANSACTION ITSELF WOULD FALL OUTSIDE THE SCOPE OF TRANSFER PRICING PROVISIONS IN THE ABSENCE OF ANY INCOME ELEMENT. AC CORDINGLY, WE ARE OF THE VIEW THAT THE LD. DRP WAS JUSTIFIED IN H OLDING THAT THE TRANSFER PRICING ADJUSTMENT BY WAY OF A MARKUP ON T HE AMOUNT SPENT BY THE ASSESSEE AND CLAIMED BACK FROM CHL IS REQUIRED TO BE MADE. 5.10 WE HAVE NOTICED EARLIER THAT THE LD. DRP HAS D ETERMINED THE MARKUP RATE AT 10% ON THE BASIS OF FINANCIAL RESULT S OF THE ASSESSEE COMPANY. IT IS WELL SETTLED PROPOSITION THAT THE B ENCH MARKING OF INTERNATIONAL TRANSACTIONS HAVE TO BE MADE UNDER AN Y ONE OF THE RECOGNIZED METHODS PRESCRIBED IN THE I.T. RULES. A PPARENTLY, THE LD. DRP HAS ADOPTED CUP METHOD FOR BENCH MARKING TH E INTERNATIONAL TRANSACTIONS. HOWEVER, IT HAS NOT BR OUGHT ON RECORD ANY EXTERNAL SUPPORTING MATERIAL TO SUBSTANTIATE TH E MARK-UP RATE OF 10%. WE HAVE NOTICED EARLIER THAT THE LD DRP HA S ARRIVED AT THE RATE OF 10% ON THE BASIS OF THE INTERNAL PROFITS DE CLARED BY THE IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 8 OF 16 ASSESSEE. WHAT IS REQUIRED TO BE SHOWN IS THAT UND ER SAME SET OF FACTS, WHAT WOULD HAVE BEEN THE MARK-UP IF THE TRAN SACTIONS WERE BETWEEN UNRELATED PARTIES. ACCORDINGLY, WE ARE OF THE VIEW THAT THE DETERMINATION OF RATE OF MARKUP REQUIRES FRESH EXAM INATION. ACCORDINGLY, WE MODIFY THE ORDER PASSED BY LD. DRP ON THE ISSUE DETERMINATION OF PERCENTAGE OF MARKUP AND RESTORE T HE SAME TO THE FILE OF THE A.O./TPO FOR EXAMINING IT AFRESH. AFTE R AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE , THE AO/TPO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LA W. 6. THE NEXT ISSUE RELATES TO DISALLOWANCE OF RESEAR CH & DEVELOPMENT EXPENSES INCURRED BY THE ASSESSEE. THE A.O. NOTICED THAT ASSESSEE HAS CLAIMED A SUM OF RS.42.95 LAKHS T OWARDS RESEARCH & DEVELOPMENT EXPENSES. THE DETAILS OF TH E SAID EXPENSES HAVE BEEN TABULATED BY LD. DRP AS UNDER: PARTICULARS AMOUNT (RS.) SALARIES, WAGES & BONUS-R&D 2,650,408 CONTRIBUTION TO P F/OTHER FUND. R&D 122,392 'WORKMEN & STAFF WELFARE EXPENSES-R&D 5,211 - CONSUMPTION OF STORES &SPARES- R&D EXPNS 516,846 POWER & FUELR&D 387,269 REPAIRS TO BLDGS-WAGES-R&D 57,847 REPAIRS TO BUILDINGS -STORESR&D 9,603 REPAIRS TO MACHINERY- WAGES-R&D 8,272 REPAIRS TO MACHINERY -STORES-R&D 3,986 REPAIRS TO MACHINERY -OTHERS-R&D 4,115 INSURANCE-R&D EXPS 83,693 MISCELLANEOUS EXPENSES-R&D EXPS 241,442 COS CONTRI SAS TO R&D OFF 138.508 MEDICAL EXPENSES-OFFICERS R&D 111,486 M E DICA L EXPENSES - STAFF & ARTISEN - R&D 130 TRAVELLING EXPENSES-AIR/BUS/TRAIN/AUTO FARE - R&D 13,083 TRAVELLING EXPENSES-R &D . 51,771 BIOLOGICAL CONTROL LABORATORY 1,103 LIBRARY BOOKS & PERIODICALS - R&D 6,331 COFFEE PLANTS PLOT EXPRNT EXPS-R&D 2,500 'TOTAL 4,295 176 IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 9 OF 16 6.1 BEFORE THE A.O., THE ASSESSEE SUBMITTED THAT TH ESE EXPENSES HAVE BEEN INCURRED IN CONNECTION WITH THE ROUTINE B USINESS ACTIVITIES CARRIED ON BY IT ON THE FOLLOWING ACTIVI TIES: SOIL NUTRIENT INDEX O VARIETAL TRIAL OF COFFEE, PEPPER AND CARDAMOM O BIO-CONTROL RESEARCH O PESTS AND DISEASE CONTROL RESEARCH O COFFEE EFFLUENT TREATMENT O COMPOST-VERMICOMPOST EXPERIMENT O QUALITY ANALYSIS OF COFFEE & PEPPER O ANALYSIS OF AGRO-INPUTS FOR QUALITY STANDARDS O WATER MANAGEMENT RESEARCH DRIP IRRIGATION FOR COF FEE O CROP DIVERSIFICATION. ACCORDINGLY, IT WAS SUBMITTED THAT THIS EXPENDITURE IS REVENUE IN NATURE AND ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. IN THE ALTERNATIVE, IT WAS SUBMITTED THAT THE ASSESSEE HAS OBTAINED APPROVAL FROM DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH, GOVERNMENT OF INDIA AND HENCE, THESE ARE ALLOWABLE U/S 35 R.W.S. 43(4)(II) OF THE ACT. IT WAS SUBMITTED THAT THIS E XPENDITURE DOES NOT CREATE ANY RIGHTS. THE A.O. HOWEVER, TOOK THE VIEW THAT INCURRING OF R&D EXPENSES RESULTS IN CREATION/ACQUISITION OF RIG HTS TO THE ASSESSEE. ACCORDINGLY, HE DISALLOWED THE ABOVE SAI D AMOUNT OF RS.42.95 LAKHS INCURRED BY THE ASSESSEE. THE LD. D RP ALSO CONCURRED WITH THE VIEW TAKEN BY THE A.O. 6.2 THE LD. A.R SUBMITTED THAT THE ASSESSEE HAS BEE N INCURRING EXPENDITURE ON RESEARCH & DEVELOPMENT ACTIVITIES IN A ROUTINE MANNER YEAR AFTER YEAR AND IT HAS NOT DEVELOPED ANY COPY RIGHT AS PRESUMED BY THE A.O. HE FURTHER SUBMITTED THAT THE CAPITAL EXPENDITURE INCURRED IN CONNECTION WITH THE R&D ACT IVITIES HAVE BEEN DULY CAPITALIZED BY THE ASSESSEE AND DETAILS O F THE SAME HAVE IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 10 OF 16 BEEN REPORTED IN THE ANNUAL REPORT OF THE ASSESSEE. HE SUBMITTED THAT REVENUE EXPENSES HAVE BEEN CHARGED TO PROFIT A ND LOSS ACCOUNT. HE FURTHER SUBMITTED THAT MAJOR PORTION O F THE R&D EXPENSES IS THE EXPENDITURE INCURRED ON SALARIES & WAGES PAID TO ITS STAFF. HE SUBMITTED THAT THE ASSESSEE IS CONSTRAINE D TO MAINTAIN R & D DEPARTMENT IN THE NORMAL COURSE IN ORDER TO MEET THE COMPETITION AND TO REMAIN UPTO DATE WITH THE CHANGE S IN THE MARKET. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT T HERE IS NO JUSTIFICATION FOR TREATING THIS EXPENDITURE AS CAPI TAL IN NATURE. 6.3 ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT TH E ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE BEFORE THE A.O. T HAT IT HAS OBTAINED APPROVAL FROM DSIR, GOVT. OF INDIA. THE A SSESSEE ALSO FAILED TO ESTABLISH THAT THIS EXPENDITURE DOES NOT CREATE ANY RIGHTS. 6.4 WE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AN D PERUSED THE RECORD. FROM THE DETAILS OF EXPENDITURE FURNISHED BY THE ASSESSEE, WE NOTICE THAT THE ASSESSEE HAS CLAIMED SALARY & WA GES EXPENSES, REPAIRS EXPENSES, ETC. UNDER THE HEAD R & D EXPENS ES. FROM THE ANNUAL REPORT FURNISHED BY THE ASSESSEE, WE NOTICE THAT THE ASSESSEE HAS DULY CAPITALIZED THE CAPITAL EXPENDITU RE INCURRED BY IT. WE ALSO NOTICED THAT THE A.O. HAS OBSERVED THAT THE SE EXPENSES HAVE RESULTED IN CREATION OF COPY RIGHT IN THE HAND S OF THE ASSESSEE. HOWEVER, THE A.O. HAS NOT BROUGHT ANY MATERIAL ON R ECORD TO SHOW THAT THESE EXPENSES HAS RESULTED IN CREATION COPY RIGHT, MEANING THEREBY, THE A.O. HAS MADE HIS OBSERVATIONS ON SURM ISES AND CONJECTURES. WE ALSO AGREE WITH THE CONTENTIONS OF LD A.R THAT IT IS A BUSINESS NECESSITY TO MAINTAIN R & D DEPARTMENT I N ORDER TO MEET THE COMPETITION AND CHANGING BUSINESS CIRCUMSTANCES . UNLESS IT IS ESTABLISHED THAT THE R & D DEPARTMENT HAS UNDERTAKE N A MISSION TO INVENT SOMETHING NEW WHICH WOULD GIVE A COPY RIGHT TO THE ASSESSEE, IN OUR VIEW, ROUTINE EXPENSES CANNOT BE C ONSIDERED AS CAPITAL IN NATURE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE A.O. WAS IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 11 OF 16 NOT JUSTIFIED IN TREATING THE ABOVE EXPENSES AS CAP ITAL IN NATURE. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE ADDIT ION. 7. THE NEXT ISSUE URGED BY THE ASSESSEE RELATES TO DISALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT. THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.1.51 CRORES. THE ASSESSEE VO LUNTARILY DISALLOWED A SUM OF RS.1,78,013/- U/S 14A OF THE AC T. THE A.O. TOOK THE VIEW THAT THE DISALLOWANCE SHOULD BE COMPU TED UNDER RULE 8D OF I.T. RULES. ACCORDINGLY, HE DISALLOWED A SUM OF RS.6,83,989/- FROM OUT OF INTEREST EXPENDITURE UNDER RULE 8D(2)(I I) OF I.T. RULES AND RS.3,05,800/- OUT OF ADMINISTRATIVE EXPENSES UN DER RULE 8D(2)(III) OF I.T. RULES. OUT OF THE AGGREGATE AMO UNT OF DISALLOWANCE OF RS.9,89,789/- SO COMPUTED, THE A.O. GAVE SET OFF OF RS.1,78,013/- VOLUNTARILY DISALLOWED BY THE ASSESSE E AND MADE FURTHER DISALLOWANCE OF RS.8,11,776/- U/S 14A OF TH E ACT. THE LD. DRP ALSO CONFIRMED THE SAME. THE LD. A.R. SUBMITTE D THAT THE A.O. HAD MADE IDENTICAL DISALLOWANCES U/S 14A OF THE ACT IN ASSESSMENT YEARS 2006-07 TO 2008-09. BEFORE THE TRIBUNAL, THE ASSESSEE HAD SUBMITTED THAT THE INVESTMENTS HAVE BEEN MADE BY TH E ASSESSEE IN THE PAST OUT OF OWN SURPLUS FUNDS AND HENCE, THERE IS NO REQUIREMENT OF MAKING ANY DISALLOWANCE OUT OF INTER EST EXPENSES. HENCE, THE ITAT, VIDE ITS ORDER DATED 6.9.2013 PASS ED IN ITA NO.1462 TO 1464/BANG/2012, HAS RESTORED THE MATTER TO THE FILE OF THE A.O. FOR EXAMINING THE ISSUE AFRESH. THE LD. A .R. SUBMITTED THAT THE A.O. HAS SINCE PASSED THE ORDER GIVING EFF ECT TO THE ORDER PASSED BY THE TRIBUNAL AND HE DID NOT MAKE ANY DISA LLOWANCE OUT OF INTEREST EXPENDITURE. THE LD. A.R. SUBMITTED TH AT THE FACTS ARE IDENTICAL IN THE INSTANT CASE AND ACCORDINGLY, PRAY ED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE A.O. WITH SIMILA R DIRECTIONS. 7.1 THE LD. D.R. ON THE CONTRARY, SUBMITTED THAT THE ASSESSEE HAS NOT DEMONSTRATED THAT THE INVESTMENTS HAVE BEEN MAD E OUT OF SURPLUS FUNDS IN THE PAST. FURTHER, THE ASSESSEE I S MAINTAINING ITS IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 12 OF 16 ACCOUNTS IN A CONSOLIDATED MANNER, WHEREBY ALL FUND S AND RECEIPTS ARE INTERMINGLED IN A COMMON POOL. HENCE, IT WILL BE DIFFICULT TO RELATE THE INVESTMENT TO A PARTICULAR RECEIPT. ACC ORDINGLY, THE LD. D.R. SUBMITTED THAT THE A.O. WAS JUSTIFIED IN MAKIN G DISALLOWANCE OUT OF INTEREST EXPENSES UNDER RULE 8D(2)(II). 7.2 WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE ISSUE OF DISALLOWANCE UNDER RULE 8D(2)(II) OUT OF INTEREST EXPENSES HAVE BEEN RESTORED TO THE FILE OF THE A.O. BY THE COORDINATE BENCH IN THE ASSESSEES OWN CASE FOR ASS ESSMENT YEARS 2006-07 TO 2008-09. IT IS THE SUBMISSION OF THE LD . A.R. THAT THE INVESTMENTS HAVE BEEN MADE BY THE ASSESSEE IN THE P AST OUT OF SURPLUS FUNDS AND THESE ASPECTS HAVE BEEN VERIFIED BY THE A.O. IN THE RESTORED THE SAID PROCEEDINGS. ACCORDINGLY, TH E A.O. DID NOT MAKE ANY DISALLOWANCE OUT OF INTEREST EXPENDITURE I N THE ABOVE SAID YEAR. IN VIEW OF THE ABOVE SAID FACTS, WE ARE OF T HE VIEW THAT, CONSISTENT WITH THE DECISION TAKEN BY THE COORDINAT E BENCH IN THE ASSESSEES OWN CASE, THE ISSUE OF DISALLOWANCE OF I NTEREST EXPENDITURE UNDER RULE 8D(2)(II) REQUIRES FRESH EXA MINATION AT THE END OF THE A.O. ACCORDINGLY, WE SET ASIDE THE ORDE R PASSED BY THE A.O. ON THE ABOVE SAID ISSUE AND RESTORE THE SAME T O THE FILE OF THE A.O. FOR EXAMINING IT AFRESH. THE DISALLOWANCE MAD E UNDER RULE 8D(2)(III) WAS OUT OF ADMINISTRATIVE EXPENSES SHALL STAND SUSTAINED. WHILE GIVING EFFECT, THE AO SHALL GIVE SET OFF OF T HE DISALLOWANCE VOLUNTARILY MADE BY THE ASSESSEE. 8. THE NEXT ISSUE RELATES TO NON-GRANTING OF FULL C REDIT OF FOREIGN TAX CREDIT. THE LD. A.R. SUBMITTED THAT THE ASSESS EE CLAIMED FOREIGN TAX CREDIT OF RS.5.43 CRORES. IN THE ORDER PASSED U/S 154 OF THE ACT, THE A.O. HAS RESTRICTED FOREIGN TAX CREDIT CLAIMED BY THE ASSESSEE U/S 90 OF THE ACT TO RS.3,89,93,091/-. HE SUBMITTE D THAT THE A.O. HAS NOT GIVEN ANY REASON AS TO WHY THE FOREIGN TAX CREDIT HAS BEEN RESTRICTED TO THE ABOVE SAID AMOUNT. THE LD. A.R. SUBMITTED THAT IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 13 OF 16 THE BANGALORE BENCH OF TRIBUNAL HAS PASSED AN ORDER RECENTLY IN THE CASE OF ITTIAM SYSTEMS PVT. LTD. (ITA NO.2464 & 2465/BANG/2017 DATED 13.1.2021), WHEREIN THE ISSUE OF FOREIGN TAX CREDIT HAS BEEN ANALYSED IN DETAIL. ACCORDINGLY, T HE LD. A.R. SUBMITTED THAT THE A.O. MAY BE DIRECTED TO ALLOW FU LL CREDIT OF FOREIGN TAX CREDIT CLAIMED BY THE ASSESSEE BY FOLLO WING THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF ITTIAM SYST EMS PVT. LTD. 8.1 WE HEARD LD. D.R. AND PERUSED THE RECORD. AS S UBMITTED BY LD. A.R., THE A.O. HAS NOT GIVEN ANY REASONS AS TO WHY HE HAS RESTRICTED THE FOREIGN TAX CREDIT TO RS.3.89 CRORES AS AGAINST RS.5.43 CRORES CLAIMED BY THE ASSESSEE. THE LD. A.R. HAS S UBMITTED THAT ISSUE RELATING TO FOREIGN TAX CREDIT HAS BEEN EXPLA INED WELL IN THE CASE OF ITTIAM SYSTEMS PVT. LTD. BY THE BANGALORE B ENCH OF TRIBUNAL. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CLAIM OF T HE ASSESSEE REQUIRES FRESH EXAMINATION AT THE END OF THE A.O. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH THE DIRECTION TO FOLLOW THE PRINCIPLES LAID DOWN BY THE BANGALORE BENCH IN THE CASE OF ITTIAM SYSTEMS PVT. LTD. AND ACCORDINGLY, ALLOW CRE DIT OF FOREIGN TAX CREDIT. 9. NEXT ISSUE RELATES TO SHORT CREDIT OF TDS. IT I S THE CLAIM OF THE ASSESSEE THAT THE A.O. HAS NOT GRANTED CREDIT OF TD S TO THE TUNE OF RS.8,22,566/-. SINCE THIS MATTER REQUIRES FACTUAL VERIFICATION, WE RESTORE THIS ISSUE TO THE FILE OF THE A.O. 10. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE RE VENUE, WHEREIN THE REVENUE IS CONTESTING THE DIRECTION GIVEN BY TH E LD. DRP TO THE A.O. TO CONSIDER FMV AS ON 1.4.1981 FOR COMPUTING C APITAL GAIN. 10.1 THE FACTS RELATING TO THE ABOVE ISSUE ARE STAT ED IN BRIEF. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD SOLD ROSEWOOD, SILVER OAK, EUCALYPTUS AND OTHER TREES. THE ASSESSEE IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 14 OF 16 COMPUTED CAPITAL GAIN ON SALE OF ROSEWOOD &SILVER O AK AFTER CONSIDERING INDEXED COST OF ACQUISITION BY TAKING F AIR MARKET VALUE AS ON 1.4.1981. IN RESPECT OF EUCALYPTUS AND OTHER TREES 70% OF THE SALE CONSIDERATION WAS CONSIDERED AS THE COST O F ACQUISITION BASED ON THE DECISION RENDERED BY HONBLE KERALA HI GH COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE COMPANY LTD. 189 ITR 580. ACCORDINGLY, THE ASSESSEE DECLARED A CAPITAL LOSS O F RS.30.67 LAKHS. THE A.O. TOOK THE VIEW THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE IN NURTURING/GROWING AND SELLING OF TREES IS NORMAL BUSINESS ACTIVITIES OF THE ASSESSEE. ACCORDINGLY, THE AO TOO K THE VIEW THAT THE GAIN ARISING ON SALE OF TREES SHOULD BE ASSESSED AS NORMAL BUSINESS INCOME. THE LD. DRP HOWEVER, ACCEPTED THE CONTENTI ONS OF THE ASSESSEE THAT THE INCOME ARISING FROM SALE OF TREES IS CAPITAL GAINS IN THE HANDS OF THE ASSESSEE ON NOTICING THAT THE H ONBLE KARNATAKA HIGH COURT HAS UPHELD THE VIEW OF THE ASSESSEE IN I TS OWN CASE RELATING TO ASSESSMENT YEARS 1997-98 TO 1999-2000 A ND 2001-02 REPORTED IN 27 TAXMANN.COM 98. ACCORDINGLY, THE LD . DRP DIRECTED THE A.O. TO COMPUTE CAPITAL GAINS ADOPTING FAIR MAR KET VALUE OF THE ASSET AS ON 1.4.1981. AGGRIEVED, THE REVENUE HAS F ILED THIS APPEAL. 10.2 WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE LD. DRP HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: 8.3 THE TAX PAYER DISAGREED WITH THE ABOVE TREATME NT AND SUBMITTED THAT THESE TREES ARE MAINTAINED AS SHADE TREES FOR THE C OFFEE BUSHES SINCE SHADE TREES ARE ABSOLUTELY ESSENTIAL FOR THE PROTECTION O F COFFEE BUSHES. IT IS NOT POSSIBLE TO GROW COFFEE IN INDIA WITHOUT THE NECESS ARY SHADE TREES. IT WAS SUBMITTED THAT AMONGST OTHER TREES ONLY SILVER OAK IS CONVERTED INTO STOCK IN TRADE AND TRANSFERRED TO THE VALUE ADDITION DIVISIO N FOR PROCESSING AND MANUFACTURE OF PLYWOOD'S. AS REGARDS OTHER TREES, T HE SUBSEQUENT TREATMENT IS TABULATED BELOW: ROSEWOOD COMPULSORILY SOLD THROUGH GOVERNMENT AUCTION JUNGLE WOOD COMPULSORILY SOLD AFTER GOVERNMENT APPROVAL EUCALYPTUS SOLD TO THIRD PARTIES MISCELLANEOUS TIMBER INTERNALLY CONSUMED BY THE COMPANY IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 15 OF 16 TO PROTECT THE COFFEE BUSHES, THE COMPANY CUTS THE OLD SHADE TREES. USAGE OF SUCH CUT TREES (ALTER THAN ROSEWOOD AND EUCALYPTUS) IN I TS TIMBER DIVISION WAS CLAIMED TO BE INCIDENTAL TO ITS COFFEE PLANTATION BUSINESS. 8.4 IT WAS SUBMITTED THAT SALE OF ROSEWOOD TO GOVER NMENT DEPOT AND TRANSFER OF SILVER OAK AND OTHER TREES TO TIMBER DIVISION IS SH OWN AS SALE OF CAPITAL ASSET AND OFFERED TO TAX AS CAPITAL GAINS. FURTHER, SALE OF MARINE PLYWOOD, FIRE RETARDANT PLYWOOD, PHENOL FORMALDEHYDE BLACK BOARD, COMMERCIAL PLYWOOD PRODUCED IN TIMBER DIVISION ARE SHOWN AS BUSINESS I NCOME. IT WAS SUBMITTED THAT THE REASON FOR THE DIFFERENT TREATMENT IS THE DIFFERENCE IN CHARACTERIZATION OF THE ITEM OF SALE I.E., TREES. AS REGARDS ROSEWOO D, EUCALYPTUS AND OTHER TREES WHICH ARE USED FOR SHADE OF COFFEE BUSHES ARE IN TH E NATURE OF CAPITAL ASSETS AND HENCE, INCOME/LOSS FROM THEIR SALE IS COMPUTED UNDER THE HEAD 'CAPITAL GAINS' ONCE THE INCOME IS RECOGNIZED IN THE BOOKS O F THE COMPANY BASED ON ITS ACCOUNTING AS REGARDS, SILVER OAK THE INCOME IS COMPUTED UNDER THE HEAD 'CAPITAL GAINS' UPON THEIR CONVERSION INTO STOCK IN TRADE OF TIMBER VALUE ADDITION DIVISION. THE SUBSEQUENT SALE IN THE TIMBER DIVISION IS OF THE ST OCK IN TRADE OF THE BUSINESS OF THE TIMBER DIVISION AND HENCE, INCOME FROM THEIR SA LE IS COMPUTED UNDER THE HEAD 'BUSINESS INCOME'. 8.5 THE FOLLOWING CASE LAWS WERE RELIED UPON BY THE ASSESSEE: DECISION OF HONOURABLE KARNATAKA HIGH COURT IN ASSE SSEE'S OWN CASE FOR AY 1997-98, 1998-99, 1999-2000 AND AY 2001 -02 REPORTED IN 27 TAXMANN.COM 98 DECISION OF HONOURABLE KARNATAKA HIGH COURT IN ASSE SSEE'S OWN CASE FOR AY 2003-04 AND AY 2004-05 IN ITA NO.110 AN D 111 OF 2009 EMERALD VALLEY ESTATES LTD. [1996] 222 ITR 799 (KAR NATAKA HC) TRAVANCORE TEA ESTATES VS. CIT [1974] 93 ITR 314 (K ERALA HC) STATE OF KERALA VS. KARIMTHARUVI TEA ESTATE LTD. [1 964] 51 ITR 129 (KERALA HC) C. HANUMANTHARAO (DECEASED) VS. CIT (MADRAS HC) (TA X CASE APPEAL NO.44/2004) THE HONOURABLE BANGALORE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR AY 2006-07, 2007-08 AND 2008-09 [ITA 1462 TO 1464/BANG/2012] CIT V. PULLANGODE RUBBER PRODUCE COMPANY LIMITED (1 89 ITR 580) 8.6 WE HAVE CONSIDERED THE SUBMISSIONS AS ABOVE AND FIND THAT THE FACTS REGARDING TREATMENT OF SHADE TREES AS CAPITAL ASSET S IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN THE TAX PAYER'S OWN CASE APART FROM THE HON'BLE ITAT'S ORDER CITED. TH E COMPUTATION OF CAPITAL GAINS AND THE FAIR MARKET VALUE OF THE ASSET AS ON 01.04.1981 WILL BE CONSIDERED BY THE AO IN THIS REGARD. IT(TP)A NOS.568, 190 & 729/BANG/2015 TATA COFFEE LIMITED, BENGALURU PAGE 16 OF 16 10.3 WE NOTICE THAT THE LD. DRP HAS FOLLOWED THE B INDING DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT I N THE ASSESSEES OWN CASE REFERRED (SUPRA). UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE DIRECTIONS SO G IVEN BY LD. DRP. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I T(TP)A NO.568/BANG/2015 IS TREATED AS PARTLY ALLOWED, THE APPEAL OF THE ASSESSEE IN IT(TP)A NO.729/BANG/2015 IS TREATED AS ALLOWED AND APPEAL OF THE REVENUE IN IT(TP)A NO.190/BANG/2015 I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAR, 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 22 ND MAR, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.